A Romanian cyanide ban could poleaxe Gabriel's gold mega project

Romania looks set to ban the use of cyanide in mining in a move that will effectively block a Canadian project to build Europe's biggest open cast gold mine, officials said on Thursday.

Gabriel Resources has already invested more than $300 million in the Rosia Montana gold mine in the central province of Transylvania but the project has faced a series of hurdles over health and environmental worries.

A key environmental review required for the project was suspended by Romania's Environment Ministry in September following a court challenge from non-governmental organizations.

Gabriel has said the suspension is illegal and designed to appease voters, and has said it will use "all resources at its disposal" to reverse the decision.

But it has said it will slash jobs and scale back activities related to the project.

A bill is now progressing through parliament that would effectively kill off the project by banning all cyanide mining.

Its sponsor, Senator Peter Eckstein-Kovacs, told Reuters on Thursday the bill had now secured government support and was very likely to be passed.

"There is a big chance that our proposed plan to ban cyanide in gold and silver mining will pass parliament. We have secured government backing ... and many opposition deputies back it."

"HAZARDOUS"

Eckstein-Kovacs, a member of the ruling coalition's junior partners, the ethnic Hungarians, argues the use of cyanide is hazardous and could lead to a repeat a 2000 disaster when a Romanian mine polluted cross-border rivers.

Romanian authorities and environmental groups say drilling in the Carpathian mountains would also destroy ancient Roman mines and that using cyanide would harm the environment.

Gabriel has defended the use of cyanide in mining saying that it cannot develop the Rosia Montana mine economically without using the poison

Environment Minister Attila Korodi told Reuters on Thursday that he hoped parliament would give a verdict on the proposed change in mining legislation soon.

"The bill is now under debate in parliamentary commission. If it passes, Gabriel will need to bring a total change to their technical project," Korodi told Reuters.

Korodi said the review of the environmental impact assessment study could be unblocked if the court cleared the case:

"If the court rules that a previous certificate obtained by Gabriel is valid, we can go ahead with reviewing the project. Such an assessment can take several months."

But analysts said Gabriel had almost no chance of reviving its project given the current political situation in Romania, something that was unlikely to change at least until late 2008.